Despite its impressive performance in representing the UK’s interests across the globe, the FCO is underfunded, says the Foreign Affairs Committee in its Annual Report into the Department’s performance. This situation has been exacerbated by the Spending Review 2010.

The FCO’s programme of property sales must be considered extremely optimistic, and the plans adopted to meet this target are hampered by Treasury rules on spending which will harm the FCO’s ability to sell a large proportion of its overseas network and reinvest the proceeds elsewhere. Treasury budgetary rules must be loosened if the FCO is to ensure value for money for the taxpayer.

There is a large responsibility on the shoulders of Lord Williams, the BBC’s International Trustee, to maintain the independence of the BBC World Service. The welcome support for the World Service shown by Lord Williams must be echoed among other members of the BBC Trust.

The budget cuts faced by the British Council will lead to the Council becoming a substantially different organisation by the end of the Spending Review period. The greater emphasis that the British Council will place on commercial activity risks a diminution of the UK’s influence and soft power. Care must be taken to avoid the British Council becoming predominantly an international English language school rather than a promoter of the UK’s reputation, culture and influence.

Committee Chairman, Richard Ottaway MP said:

"The Foreign and Commonwealth Office does a good job in challenging circumstances but the budget cuts demanded by the Spending Review will exacerbate long-term problems caused by continued cost-cutting in the FCO. I am therefore disappointed in the lack of information provided to Parliament as to how the FCO is to meet its spending reductions target.

Last year, my Committee produced a Report into the outcome of the Spending Review 2010 for the FCO. We concluded that SR2010 may turn out to have had a very damaging effect on the Department’s ability to promote and safeguard UK interests overseas. The decisions so far taken by the FCO to implement the Spending Review 2010¬, including reductions in the deployment of UK-based staff overseas and the planned programme of property sales, have indicated that our initial conclusions were correct.

The Committee recommends that the Foreign and Commonwealth Office provide detailed information on how it intends to meet the spending reductions demanded by the Spending Review 2010 to Parliament as soon as possible."